How to Trade Gold Using COT Data

📌 Step-by-Step Analysis & Prediction
1️⃣ How to Trade Gold Using COT Data
Scenario 1: Gold is Rising
Commercials are heavily short (84%) → They expect a potential pullback or reversal.
Institutions are long (84%) → This suggests strong bullish momentum.
Retail traders are long (68%) → This confirms that the public is following the uptrend.
🔹 Trading Strategy:

Look for resistance zones around $2,950 - $3,000 (historical key levels).
If commercials start reducing shorts, the uptrend may continue.
If commercials stay net short, expect profit-taking and a potential correction.
Best trade: Wait for bearish confirmation and short near resistance with a stop-loss above $3,050.
Scenario 2: Gold is Falling
Commercials are now long (16%) → They expect prices to recover.
Institutions are reducing longs (16%) → Hedge funds are exiting long positions.
Retail traders are still short (32%) → This suggests fear in the market.
🔹 Trading Strategy:

Look for support zones around $2,850 - $2,875.
If institutions start adding longs, this confirms a bottom formation.
Best trade: Look for bullish confirmation and buy at support, targeting $2,950+.
2️⃣ How to Trade USD Using COT Data
Scenario 3: USD is Rising
Commercials are short (77%) → They expect USD to weaken soon.
Institutions are long (73%) → They are driving the uptrend.
Retail traders are also long (52%) → Retail is following the institutions.
🔹 Trading Strategy:

If DXY is at resistance (105-106), expect a reversal.
Best trade: Wait for USD weakness confirmation and short the USD against strong currencies like EUR or JPY.
Scenario 4: USD is Falling
Commercials are long (23%) → They anticipate a USD recovery.
Institutions are reducing longs (27%) → Hedge funds are exiting bullish positions.
Retail traders are short (48%) → This suggests retail is bearish on USD.
🔹 Trading Strategy:

If DXY is near support (102-103), expect a USD bounce.
Best trade: Look for bullish confirmation and buy USD against weaker currencies (e.g., short EUR/USD).
🔵 Final Trading Plan
Check COT Data Every Friday → Look for shifts in institutional and commercial positions.
Confirm with Technical Analysis → Identify key support/resistance levels.
Use Sentiment as Confirmation → If retail is overly long/short, the reversal could be near.
Set Stop-Loss & Targets → Define clear exit points to protect capital.
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